Modal equality

Were fares to be set purely on the basis of total cost recovery, then this would disadvantage capital intensive (particularly rail-based) modes. As such, it is common practice to standardize fare rates across all modes to ensure their equal attraction to passengers and so achieve the levels of patronage assumed in the economic justification behind their original investment.

In order to achieve this equality of fares, the capital costs of the infrastructure investment are often publicly funded or supported and not directly recovered from passengers. Development of capital-intensive modes, even bus rapid transit, is thus often dependent on the support of central government or development partners prepared to invest for their economic and not just financial returns.

Even where there is a standardization of fares across modes, though, it is still possible to have a differentiation of fares in respect of the quality of service provided. Thus, for example, there might be higher fares authorized for premium services in air-conditioned vehicles that cost more to operate. In the same manner, there might be higher fares for express services within any mode in recognition of the value of time being saved by their passengers in comparison with the standard service offer.